EXCLUSIVE: The streaming war is raging on a global scale. Studios such as Disney and Warner Bros are charging head-first into competition with powerful upstart Netflix and tech giants Amazon and Apple in an aggressive land-grab for eyeballs and subscriptions. Against all that noise, it would be easy to forget that standalone local players remain a key part of the equation.
China is a notable exception to the global picture, with government restrictions meaning there is no Netflix in the country, leaving local services including iQiyi, Tencent Video and Youku to lead the charge. But there are other territories where the major players are being challenged. In Russia, Netflix is growing but only accounts for roughly 4% of the market, with local players including Ivi and Okko far ahead in the pecking order. The Disney-owned Hotstar (now Disney+ Hotstar) is huge in India but competes with Alt Balaji and Eros Now. Hong Kong-based Viu may have departed the Indian market but still has a big viewership in southeast Asia, and Malaysia-based iflix is also a force there.
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In the Middle East and North Africa, the picture is diverse, with healthy competition emerging between the likes of Netflix and a variety of local players. One of those, Starzplay, is celebrating its fifth anniversary in 2020. The service, which is not a direct offshoot of the Lionsgate-owned network Starz and its various streaming channels (more on that below), was co-founded by Maaz Sheikh, a former Silicon Valley entrepreneur who worked as COO of Dubai-based satellite provider OSN before launching his own endeavor.
Built from the ground up in a challenging market where many people don’t own a credit card, it’s been a battling journey, but Starzplay is now a firmly established leading player in MENA, spanning 21 counties where it goes head-to-head with the likes of Netflix and Amazon, and other local players such as OSN and Shahid Plus. As per a report conducted by IHS Markit last year: Starzplay has a 29% market share in MENA, while Netflix has 24%, Shahid also has 24%, and Amazon Prime has 3%.
In an exclusive interview with Deadline, Starzplay CEO Sheikh reveals that the company hit 1.7 million paying subscribers at the end of 2019, and has seen an unprecedented boom in sign-ups and consumption during the lockdown. In a biz that is secretive about its numbers, the CEO is refreshingly candid with facts and figures during our discussion.
Key to the success of Starzplay has been its ability to forge and renew relationships with U.S. studios, which sees it carry premium content such as The Office and the Star Wars films. The company is also beginning to eye production for the first time, as Deadline revealed back in December, embarking on its debut original series Urban Legends with leading producer Image Nation. We discuss those as well as the impact of the pandemic below, which Sheikh reveals is having a two-fold impact: On the one hand, this is a boom time for viewing figures and new subs, with many people stuck at home furloughed and cinemas shuttered. On the other, a global economic crisis in the making is prompting many to tighten their belts and focus on their core markets.
DEADLINE: First thing’s first, I think there’s been some confusion around your company’s name – could you clarify your relationship with Starz in the States?
MAAZ SHEIKH: Yes this was the first thing I wanted to address. Starz, the U.S. network, has recently started to launch services under the StarzPlay brand. We [Starzplay, styled as STARZPLAY in its branding] are an independent company headquartered in Dubai. The U.S. Starz is one of our three shareholders [with asset firm State Street Group and seed investors SEQ]. Five years ago we were pitching our idea to all the studios: we were a local team that knows the MENA region, we suggested launching a direct to consumer service under their brand. We came to an agreement with Starz, they were already in the DTC business in the U.S. and they were looking for an international venture. They wanted to do it but didn’t want to be the only investor.The Office NBC/Photofest
As we raised that first round, one of the conditions were agreed with Starz was that the service would carry the Starzplay brand. Over time they have seen the growth of this platform and have chosen to launch their own Starzplay service as add-on packages to Amazon and Apple TV+ in markets in Europe and Latin America. We remain Starzplay branded in this region.
DEADLINE: So the plan going forward is to co-exist?
SHEIKH: We have spent five years building this brand, we have a lot of brand equity built in. This year we’re trying to become cashflow positive and stand on our own two feet, in an online business that is not easy. At that point we can make the decisions we want to make for what is right for this company and its future. We do have to represent all of our shareholders, Starz being one of them.
DEADLINE: Congratulations on five years in the biz – give us some reflections on your time so far.
SHEIKH: It would be fair to say the first year was extremely hard. There were certain things we didn’t get right, underestimated, and it took about a year and a half to find our bearings. We launched in 2015 and in 2017 is when we found our groove and had all the pieces of the puzzle come together.
DEADLINE: Can you give us some figures around your current viewership and subs?
SHEIKH: As of the end of 2019 we were at 1.7 million paying subs and had had six million app downloads. However, we have seen consumption change a lot in the last eight weeks. Before COVID-19, it was about 35 minutes per user per day. This almost triple over the last eight weeks, peaking April 15. It is still 2.5 times up on our baseline from January. We are now seeing about 110 minutes per user per day. We are not disclosing our Q1 subscriber numbers just yet, because while it’s been a dramatic growth period we don’t know how long they will stay in the coming months.
We have also seen a major shift towards more family-centric, young adult and teenage content. Our shows with Warner Bros, like the DC comic franchises including The Flash and Supergirl, are starting to do really well, as are the Disney classics. We did a special Disney Ramadan promotion where we released a new, Arabic-dubbed Disney movie every day. That was extremely successful for us.
DEADLINE: What are the key lessons you have learned?
SHEIKH: We thought we could launch a business with credit card as the only method of payment. This was five years ago and in the internet world that is an eternity. We quickly adapted to launch with mobile payment as an option, to this date that remains our number one differentiator from Netflix – they still see the world with a U.S. centric mindset where having a credit card is the norm. Our view is exactly the opposite, most of the world does not have a credit card, but everyone does have a mobile phone. We have partnered with 24 operators in the region to allow customers convenient payment methods.
We are in 21 markets now. UAE has 65% penetration of credit card, Saudi Arabia has 25% penetration, in Egypt it’s less than 5%. If you’re going to become a mass consumer service you really have to solve this problem. Even among people who have credit cards, there is a trust issue, they are still not always comfortable paying with them.
DEADLINE: What is the balance of content on your platform?
SHEIKH: The story is evolving. Until now, our success has primarily been Hollywood content. Because we we launched two years before Netflix, we were able to secure long-term deals with the likes of Disney, Sony, and Warner Bros. And as Netflix has gone more into its own originals, we have established ourselves as a proven platform in the region. Those studios are keen to license us their bigger shows and franchises. For example, we are the only carriers of The Office and The Big Bang Theory in MENA. Disney and ABC shows like Grey’s Anatomy are also only on our service.‘Supergirl’ The CW
The majority of our bets have been on major Hollywood series and franchises, but we have started to add acquisitions at script level. Once a show has been produced we may not have the ability to compete with someone who is willing to license at a global level. If Sky decides to get into the fight because they want to carve out the UK as a market, that creates room for us to take our territories – alone we cannot compete with Netflix and Amazon. We have done a few acquisitions like that, and they have become defining shows for the company. Vikings was extremely successful, as was Britannia, which was a Sky original that we acquired for Middle East before Amazon took the rest of the world.
Arabic content demands remain the highest here but they are met through traditional broadcast channels, Hollywood is where our opportunity was initially. But we have also realized that going forward that segment of the market may not be big enough, so we need to evolve.
DEADLINE: Hence the news that you will co-produce Urban Legends…
SHEIKH: We saw a lot of eyeballs from the younger generation here going to Youtube. Now that they are watching Vikings and Stranger Things and The Walking Dead, we have an opportunity as an industry to bring Arabic content that connects with the youth to our platforms.
DEADLINE: The likes of Netflix and Amazon are making aggressive moves into local markets – Netflix launched its first Arabic series Jinn last year (it caused controversy in Jordan) – how are you reacting to that?
SHEIKH: We know what works and what doesn’t because of our data. It doesn’t have to be high-budget, high-end like Netflix or Hollywood to compete. We did a test with one of the established Saudi Arabia Youtube shows, Masameer – it’s a low budget, animated Family Guy equivalent for the Arabic world. We took an exclusive window before each episode went onto YouTube and that experiment was extremely successful for us.‘Masameer’ Starzplay
Our second strategy is to partner with either major global producers or other platforms to create a world class show. An example of that would be Baghdad Central (with the UK’s Channel 4) which was produced by Freemantle. We worked with them to make it our original in our region, and it was Hulu in the U.S.. The story is very relevant because it’s a gritty crime drama based in Baghdad, set at the peak of the invasion. It is in half Arabic, half English, for us that’s a successful formula. For local audiences, seeing Corey Stoll side by side with an Arab cast is very powerful.
The third formula is Urban Legends. It’s 100% produced in this region, it’s high production quality, all in Arabic. We have seen some mini majors in Hollywood who are interested in collaborating with us on that show.
DEADLINE: Is the plan to produce more in house?
SHEIKH: Yes. Our goal for 2020 was to do one show. Next year we want to scale it to two, then four per year from 2023. We are talking to producers in the region and also producers like Freemantle about more projects.
DEADLINE: Are you expecting to see U.S. streamers produce more originals in MENA?
SHEIKH: I think so. Netflix is definitely getting more active here. One of the reasons the region is attractive is that dollar for dollar you get a lot more value, for example Baghdad Central was produced in Morocco. The access to talent and resources is efficient here, and in terms of value for money, it’s extremely attractive. You can make a very high quality production for $50,000-$80,000 per episode.
You’re looking at 400 million people here. If you can figure out the right content for the right audience, the opportunity for return on investment in this region is very attractive. I can see why Netflix and Amazon are interested in investing here.
DEADLINE: Is Starz interested in producing originals in the region?
SHEIKH: We do talk about it, but for the most part I think they see us as their arm so they don’t need to get involved from Hollywood. We come up with the ideas and take it to our board – for them it’s their original as well.‘Baghdad Central’ Starzplay
DEADLINE: You secured $125M in funding to date, do you think you’ll need to do another round as you push into originals?
SHEIKH: The goal right now is no. We are very close to breaking even so our aim is to do that in Q4 and stand on our own two feet.
DEADLINE: Sounds like the opposite of the debt-laden Netflix model.
SHEIKH: They have so much cash and they can raise more debt so they can leverage extensively. We are still trying to find our balance, we are only a five-year-old company. The challenge with original content is that old adage – poison is in the dosage. You do too much of it, do it too early, do it too late, you can burn yourselves. It’s finding that time and that volume, once you’ve established yourself with a credibility and proven the scale, then you can be more aggressive. We are taking a more cautious approach.
DEADLINE: Do you have multiple pricing tiers?
SHEIKH: Another of our differentiators is we see each market very differently in terms of demographic and affordability. We have three pricing tiers – one for the Gulf markets where we are priced at $10.99, in Egypt we are $4, and in the french-speaking block of North Africa (Tunisia, Morocco, Algeria), we’re priced in local currencies but it’s about $3.50.
DEADLINE: You don’t have a free ad-supported tier – any plans to introduce one?
SHEIKH: The content we have doesn’t allow for an ad supported service. The first-run shows, by contractual obligation to the studios, we can’t do ads. It’s also a difficult model to scale, that’s not our strength.
DEADLINE: With cinemas closed during the pandemic, have you looked to make any deals for films that can’t get theatrical releases?
SHEIKH: We are looking at those but our focus is getting movies on a second run basis following theatrical release. We are currently showing Jumanji: The Next Level and Black Panther, they are top-performing movies. We also always have collections of major franchises – for example, you can only watch the Star Wars and Marvel movies on Starzplay in MENA.
DEADLINE: Clearly you have a strong relationship with Disney, are you worried Disney+ will launch in the region?
SHEIKH: Disney has two major partners in the region, us and pay TV company OSN. Disney is focusing on the U.S. and western Europe, they are assessing what their trade-offs are when entering markets. Here they gave us the Star Wars collection and put The Mandalorian on OSN.
DEADLINE: How much longer does your Disney deal have to run?
SHEIKH: Our typical deals with studios are 3-5 years, we have another two years with Disney.
DEADLINE: You also recently renewed your Warner Bros deal for three more years. Do you have any others that are coming up soon?
SHEIKH: We’re looking to extend our Universal deal. We also have an output deal with Showtime that continues. We’re always in talks with Sky and others for one-off shows as well.
DEADLINE: Are you expecting any of the other big streamers from the U.S., say HBO Max or Peacock, to move into MENA and compete with you?
SHEIKH: It’s always difficult to predict these things. The way we see it, especially with the current COVID situation and how that has hit theatrical distribution and also theme parks, for the next 2-3 years these companies are going to focus their expansion on the U.S. and western Europe, that’s where the majority of the revenue opportunity is for them. If they have partners like us in the region, we see them trusting us more and more – if they didn’t already have a stable streaming platform here to license shows they would probably think twice.
DEADLINE: There have been censorship challenges in MENA in the past – how has your experience been?
SHEIKH: We are regulated, we have licenses in each market. In UAE we were the first service to be granted a streaming license, the category hadn’t been created before. But it’s been five years and we have not been asked to censor or take anything down. We understand the sensitivities. We try to self regulate as much as possible – we stay away from politics and religion.
DEADLINE: Do studios/distributors ever have to edit their content?
SHEIKH: No. If we see a show where the whole plot goes against what would be appropriate, we just won’t take that show. But the studios won’t send edited materials, they leave it to the platforms.
One example, the movie The Dictator, it’s a fictional country but everyone knows it’s about Libya. It’s very funny and we’ve had it on our platform, it’s performed well and no one has complained. Also Our Cartoon President, the Stephen Colbert show, it’s a little political in nature but it’s an animated comedy, we’ve shown it with no problems. Another example is Homeland. When faced width the scenario we’ve always aired on the side of showing it and have had no problems.
DEADLINE: You’re available in 21 countries – any plans to expand?
SHEIKH: Being in Dubai does give you geographic access to Sub-Saharan Africa as well as south Asia. We expanded into Pakistan about a year ago, we partnered with the leading mobile operators there. We continue to look at opportunities but we are very focused on getting to our break even point.